Bestinvest says
The focus is on quality smaller companies that have good visibility on future earnings, the manager typically runs a high conviction portfolio of what he considers are future winners. The Japanese market is cyclical and growth companies such as those Mitchinson targets are not always rewarded as western investors might expect. Whilst this fund is by no means the most volatile small cap Japanese fund investors must be prepared to accept short term variations from the benchmark and volatility in search of longer term returns. Mitchinson has been investing in Japan since 2001 and is based in Hong Kong.
The fund is essentially a stock picking fund where the manager seeks to identify companies with strong market shares in growing industries either in Japan or, typically, in emerging markets.
The fund will differ from the Topix weightings, to a reasonable extent and is likely to be more volatile this benchmark. Essentially investors are buying the managers ability to identify prominent trends and companies that are benefiting from this. Crucially, especially in Japan, is the fund manager's ability to identify company management that will drive shareholder value. Mitchinson will primarily use 'growth' metrics to identify investigable companies. Typically this will mean he focuses on revenue growth, price to earnings, EBIT and cash flow for company valuations. Although this is placed within the context of quality management.
Mitchinson has access to JPM's considerable resources in Japan and Emerging Markets. However the team in which he sits is autonomous to a degree, given that he originally worked for Jardine Fleming, a specialist Asian equity house which was bought by JPM in 2000.